UTXO vs account model: how do Bitcoin and Ethereum track balances?

Fees are explicit and paid from the sender's balance: gasUsed × effectiveGasPrice. The value sent is separate from the fee.

Token balances such as ERC-20s are not account balances. They are entries in the token contract's storage, so you read them with balanceOf on the contract, not with getBalance.

Side-by-side

What this means when you write code

On Bitcoin

• Coin selection matters. Fees scale with transaction size in virtual bytes, not with the amount sent. A wallet holding hundreds of tiny UTXOs pays more to spend them, and outputs below the dust threshold can cost more to spend than they are worth. Consolidate when fees are low.
• Always create change. Use the wallet's funding RPCs (send, walletcreatefundedpsbt) rather than building raw transactions by hand unless you really need to.
• Unconfirmed chains are possible. You can spend an unconfirmed output. This is what makes child-pays-for-parent work, but it also means a child fails if its parent is replaced.
• Watch outputs, not addresses. Index by txid:vout when tracking deposits.

On Ethereum and other account chains

• Nonce management is your problem. A transaction with nonce 7 cannot be mined until nonce 6 is. One stuck, underpriced transaction blocks everything after it from that account. Services that send in parallel need a single nonce allocator per key, or several keys.
• Replacement is by nonce. To cancel or speed up a transaction, send a new one with the same nonce and a higher fee.
• Reads are simple. getBalance, balanceOf, done. Historical balances need an archive node or an indexer.
• Contract state is shared. Two users calling the same contract touch the same storage, which is where front-running and ordering problems come from.

Other chains mix the two

• Cardano uses an extended UTXO model. Outputs can carry datums and be locked by validator scripts, which makes transaction outcomes predictable before submission.
• Solana uses accounts. Each transaction declares upfront which accounts it reads and writes, so the runtime can execute non-overlapping transactions in parallel.
• Sui tracks state as versioned objects with owners, which borrows ideas from UTXOs within an account-like programming model.

Summary

1. UTXO chains track spendable outputs. Balances are computed, fees are implicit, and change outputs are mandatory.
2. Account chains store balances and nonces. Fees are explicit, and ordering per sender comes from the nonce.
3. On Bitcoin, get coin selection, change and dust handling right, and track deposits by outpoint.
4. On Ethereum, manage nonces centrally, replace stuck transactions by nonce, and read token balances from the token contract.

How many confirmations should I wait for before trusting a transaction?

On Bitcoin, scale confirmation depth with the amount at risk, since finality is probabilistic. On Ethereum, wait for the finalized checkpoint. On rollups, wait for the batch to be final on L1.

#consensus#transactions